The following are some of the critical success factors and challenges to optimizing zakat collection from crops, livestock, trade and business, salaries and professional incomes, minerals and other sources. A problem that persists across all categories of zakat is identified as lack of public awareness of the mandatory nature as well as the rules of zakat. Similarly, awareness levels are quite low among relevant stage agencies as regards their legal obligation to support the Diwan in its collection efforts.
The share of zakat on crops in total zakat has witnessed great variation – between 30-50 percent, which is attributable to several factors, e.g. natural and climatic factors; security conditions faced by some areas; problems unique to large agricultural projects and a decline in the contribution of small-irrigated schemes due to the high costs of agricultural production. Nevertheless, the fact remains that zakat from crops is a significant contributor to the total kitty and the share has been rising in recent times. Overall, one may find that zakat from crops is collected in areas of relative stability. Collection also has benefitted from the accumulated experience of workers in the zakat collection in the field. Some major challenges, however, remain.
- Overall, monitoring costs are quite high. It is extremely difficult to monitor all production, since large tracts of land are difficult to reach. Reaching out to faraway locations may not also make economic sense if the potential zakat to be collected is not large enough.
- Leakages are hard to control in view of multiple entry points to major cities. Attempts to set up control points to monitor the highway traffic at entrances to major cities are thwarted by private entry points. For instance, Khartoum State, which is one of the largest producer of agricultural products in the Sudan, provides for easy transport of such goods and an easy route for exports through the sea.
- Many of the products are stored at the sites of production making it difficult to monitor them in a timely manner and to subject them to zakat. A large part of the production goes for domestic consumption that enhances difficulty in assessing the true zakat bas. In addition, zakat due from the production of some small private holdings is hard to monitor and collect, even though the same represents a significant proportion of the total production.
Livestock contributes significantly – more than crops – to the GDP of Sudan. It is a dominant form of zakatable wealth in regions, such as, Darfur and Kordofan. However, it contributes a meagre 7 percent to total zakat. A major reason for this is widespread instability in these regions with large herds of livestock. Zakat collected from livestock has thus, been affected by poor security situation in the region, even while it has experienced a steady increase.
- Another issue with livestock is the opaqueness of national boundaries across which the herds move in search of pastures. This makes it extremely difficult to keep track of the livestock and subject them to zakat.
- Owners of livestock are a difficult people of deal with according to zakat collectors and it requires a high degree of efficiency, professionalism and hard work to collect zakat from the people who keep changing their locations in search of pastures, often across national borders.
Zakatable wealth from mining in Sudan is mostly in the form of gold. Zakat collected from this source has seen a spurt only during the last couple of years. The major problem areas in zakat collection on gold are as follows:
- Families hold a large chunk of gold and the state apparatus for zakat collection does not have full control over production process of gold.
- There is private and irregular mining as well as foreign and non-Muslim ownership of the mines that makes it difficult to obtain information on the annual production and levy zakat.
Trade and Commerce
Zakat from trade and commerce constitutes largest source of zakat considering data over the last decade. Its share in the total zakat reflecting its relative importance may be attributed to (i) the growing importance of the services sector and industry in the composition of GDP and (ii) steady development in the capacity of the staff of Diwan and in systems leading to enhanced coverage. However, collection of zakat on business and commerce in Sudan faces many challenges that need to be addressed.
- A key challenge relates to the lack of coordination between state zakat body and the banking system. The Diwan Zakat exercises little control over bank deposits that are zakatable. There is no sharing of information or coordination between the Diwan and the central bank of the country in this regard. It is estimated that the zakat due on bank deposits of23,416 million SDG was 585.4 million SDG in the year 2013 alone, a sum equivalent to 115.8% of the total collection under trade and business. This zakat could be easily collected with the support and cooperation and in coordination with the banking system.
- Zakat collection also suffers due to a lack of coordination between the Registrar of Companies and the Diwan Zakat. It is estimated that the number companies that pay zakat is less than one-tenth of the over forty thousand registered companies. While some companies may not be zakatable owing to their being owned by non-Muslims, the fact remains that there is substantial loss of zakat due to lack of coordination.
- There is also loss of zakat due to absence of any linkage between customs clearance procedures and zakat payment. Linking up a certification by zakat authorities (that zakat due has been paid) with customs clearance of goods entering or leaving the country will significantly boost collection.
- Investment by government bodies and companies are subject to zakat. However, the Diwan has little option but to accept the zakat allocated by the Auditor General in this regard. This results in a dispute between the company or government body and the Diwan Zakat.
- The Diwan, though it performs a function comparable to Inland Revenues Authority, remains comparatively understaffed and with grossly lower amount of resources at its disposal. At the same time, its domain of activity is much wider. This naturally hampers collection efficiency.
Miscellaneous (Assets on Lease, Salaries, Wages, Fees)
Together, these constitute less than 15 percent of total zakat, notwithstanding their high potential. The primary reasons for this include lack capacity of the staff of the Diwan and lack of systems to monitor and collect all forms of wages, salaries and other incomes.
- When government units, foreign missions and international organizations, own the leased property collection of zakat by the Diwan is less efficient as the latter is not adequately empowered to take all necessary steps in such cases.
- The system to monitor the incomes of high-ranking employees in government as well as in the private sector is weak, especially when they are posted overseas.
- A provision in zakat law (Article 49) requires presentation of zakat settlement certificate before certain transactions can be completed, e.g. payments from the government treasury, states, governments, institutions of local council, treasuries of public organizations and institutions, or companies to which the government contributes; registration of companies, co-ownership, business names and trademarks register; registration, or renewal of registration in the register for importers and exporters; registration of ownership of real estates; participation in government auctions; obtaining licenses, renewal and transfer of ownership of commercial and rental vehicles, harvesters and tractors; obtaining and renewal of trading licenses; seeking approval of erecting multistory buildings This is purported to enhance zakat compliance. However, the implementation of this provision has been extremely weak in view of continued resistance on the grounds of public grievance.
- Due to the vast expanse of agricultural areas and given the hugeness of the monitoring task, the zakat collection efforts may be timed with seasonality of crops, taking periodic breaks after zakat collection is completed for a given cycle of crops.
- The presence of Diwan at specific control points on Highways should expedite resolution of conflicts and enhance efficiency
- The involvement of Diwan in the agricultural census should facilitate easy completion of the public records of the zakat payers.
- Efforts should be made to enhance the awareness of jurisprudence of zakat on agricultural production and to involve the zakat payers in the distribution of a part of the zakat.
- A focus on in-kind collection couple with adequate incentives for zakat collectors should lead to expansion of zakat collected.
- Compliance of Article 49 of the Zakat Act of 2001 must be ensured which requires linking all government transactions and land records, renewal of business licenses and permits of public vehicles, provision of services of customs clearance and registration of companies with certification of zakat settlement by the Diwan.
- Public auditor of banks, companies and government agencies that have invested public money should coordinate with the Diwan before placing any provision for zakat in the budget for these units.
- The Diwan should be provided with facilities and customs exemptions for mobility devices and devices, which it needed in the conduct of its work.
- The Diwan should have access to all the field studies, surveys and census data to incorporate the same in its database of zakat payers.
- The Diwan should coordinate with voluntary and service providers around the center and states to obtain the required information that will help collection of zakat similar to taxes and duties.
- Zakat collection should involve use of modern technologies and networking supported by training to raise the technical capacity of zakat officials with a view to enhancing the outreach and depth of zakat.
- Zakat mobilization should actively involve local committees as a way to build social capital and enhance community solidarity. Local participation should be sought in the collection ofzakat on agricultural products of smallholdings, and inventorize merchandize and leased property in the locality. Zakat should be distributed in the neighborhood in order to encourage them to contribute to community solidarity.
- The Diwan should seek full coordination with the central bank and the Ministry of Minerals to enhance its effectiveness.
- The competent management of zakat on metals should require monitoring the production plans of all producers of metals and their extracts.
- Some fiqhi issues need to be addressed urgently. For instance, zakat on extracted minerals from the land of Muslims, financed by foreign capital, raises important issues. How should the yield be subjected to zakat, given that the foreign investor is only a tenant of this land that is owned by a Muslim zakat payer? Should zakat be levied on total output or minerals extracted or should it be levied only the share of the Muslim owner?
- The children of pastoral tribes in the desert tribes of Kordofan and Darfur and Kassala should be allowed to take over the collection of zakat in due course.
- A large proportion of cattle collected as zakat should be distributed at the collection area itself to save on costs of transportation and storage.
- The workers engaged in the collection of zakat for cattle should be given a special in-kind incentive for making the rural poor owners of livestock livelihood projects.
- Top zakat payers from livestock owners should be honored for their contribution to community development and solidarity at the time of distribution of in kind zakat to the region’s poor.
- The Diwan should coordinate with trade unions in the matter of zakat collection, as the latter may share vital information regarding wages, output and profitability.
- The Diwan should set up its own storage facilities and warehouses to save the crops and livestock.
- There should be an all-out initiative to sort out the complexities of the procedures and the laws of other institutions so that the Diwan may look forward to improved communication.
Mohammed Obaidullah | March 19, 2015